Investors retreat on Middle East conflict and Trump’s proposed tariffs, lifting oil prices and Fed rate hike bets.
Asian equities fell sharply Friday as US-Iran hostilities and impending US tariffs spooked investors. Japan’s Nikkei 225 dropped nearly 3%, while South Korea’s KOSPI led declines with a 4.5% loss. The US military conducted its 13th consecutive night of strikes against Iran, amid retaliatory attacks on US-linked assets in the Gulf and Red Sea shipping disruptions.
Oil prices surged to a near two-month high on supply concerns, stoking inflation fears. Traders now price a 93% chance of a Fed rate hike by year-end, per CME Group’s FedWatch Tool. Separately, the Trump administration plans 10%-12.5% tariffs on nearly all US imports, reviving global trade war anxieties.
The Hang Seng index mirrored regional losses, reflecting broader risk aversion. Markets remain on edge over potential central bank tightening and geopolitical fallout.